Inland Empire leads US in large industrial leases

It’s news but not a big surprise: The Inland Empire claimed the biggest share of top 100 industrial leases nationwide in the first half of the year.

A couple of years have elapsed since the inland market — which covers both Riverside and San Bernardino counties — held the top spot in the regular reports by CBRE. It returned to the top spot in the recent six-month period with 15 of the top 100 industrial leases in the U.S., L.A. Business First reports. 

The 15 deals combined for 13.5 million square feet, with nearly half of them new leases.

The Inland Empire got a second nod related to the overall top spot, laying claim to the most industrial lease deals of 1 million square feet or more during the period.

The region’s industrial market turned white hot during the pandemic, when the trend toward digital commerce and home delivery drove inordinate demand. From 2021 to 2023 it was not unusual for spec distribution centers of hundreds of thousands of square feet to find tenants to sign leases for entire developments before construction was completed.

But the Inland Empire and the rest of the country saw demand drop over the past year, as some big tenants, such as Amazon.com, sorted out their needs and trimmed space.

The Dallas-Fort Worth market supplanted the Inland Empire as the hottest industrial market in 2023, based on CBRE’s data, but fell back to second place nationwide for the first six months of this year with nine large leases combining for 8 million square feet.  Memphis finished third, also with nine leases that together accounted for 6.1 million square feet.

Ian Britton, CBRE managing director and regional leader for the Inland Empire, told L.A.Business First that the deals in the region over 2024’s first six months reflect a trend of big tenants consolidating distribution operations in bigger facilities. 

“Although deals are taking longer to make and there is less urgency among tenants, larger occupiers are taking advantage of the opportunity to right-size their supply chains and become more efficient,” Britton said in a statement. “Many are consolidating multiple facilities under one roof, improving demand in the 1 million-square-foot-plus size range.”

Average lease rates nationwide, which are around 70 cents a square foot, rose by 7.7 percent in the first half compared to a year earlier. The average rate in the Inland Empire was around $1.24 per square foot.